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MTS Has 5M Mobile, Over 100k Mobile Broadband Subs; Russia To Invest $677M For 20% Stake

At a press conference today, new telecom operator MTS (Shyam Sistema/SSTL) announced that it has crossed 5 million mobile subscribers, 100,000 of them on mobile broadband. To mark hitting the milestone, it has announced the launch of ‘Unlimited MBlazer’, a broadband product which offers subscribers unlimited data access for 30 days at Rs. 999.

Responding to a question from MediaNama about impending competition from winners of 3G (details) and Broadband Wireless Access spectrum (details), Vsevolod Rozanov, President and CEO of SSTL said that their mobile broadband subscriber base is increasing 30-40% month on month, and providing them with an ARPU of around Rs. 500 per connection; the company said that a large number of its mobile broadband subscribers are coming from corporates who are placing multiple orders with the company.

“The market is already competitive,” Rozanov said, “there are three other players offering products in the same category. We don’t expect more than 1-2 more competitors on the CDMA side, so it is unlikely that competition will increase much further. We have a strong data brand, and the market has a very small number of Internet connections, and we see the addition of new players as a positive thing since this will further expand the market. Very few people value speed, and 30% of our sales are still 1x dongles.” Atul Joshi, Chief Sales Officer of SSTL added that speeds as high as 3.1 mbps require ideal network conditions, and they have fairly stable speeds across their network.

MTS has licenses for all 22 circles in India, with operations live in 12 circles. Rozaov added that the Russain Parliament has approved the proposal for SSTL to raise money from the government, though the means of raising capital has not yet been decided. It will go through four-five ministries, and eventually an IPO might take place. SSTL says that government will pick up around 20% stake, which WSJ reports will be for $677 million. This amount, Rozanov added, will be before a possible IPO, and will take care of their immediate funding requirements. He declined to comment on specifics of CAPEX requirements for SSTL, or rollout and subscriber targets, saying that the company can’t make forward looking statements. More details, he added, will be available once Sistema announces Q2 results. Rozanov said that SSTL is on course to break even by 2013.

The company also declined to comment on questions around talks with Qualcomm, which needs to sell 26% stake in its BWA operations to an Indian partner, or an investment in Reliance Communications, which is looking to sell 26% stake. (ED: Neither of those questions made much sense to me since Qualcomm needs to bring on board an Indian partner, and to pick up stake more than 10% in Reliance Communications, Sistema would need to sell its stake in Shyam Sistema).

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